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Craig-Hallum Begins Coverage of CDx Firm Celcuity

NEW YORK – Investment bank Craig-Hallum announced Monday it is initiating coverage of companion diagnostics firm Celcuity with a Buy rating and a $16 price target.

Celcuity's CELsignia platform identifies cellular signals corresponding to drug response, harnessing a patient's living tumor cells. The firm uses the information provided by its technology to develop commercial companion diagnostic tests, Nowak said in a research note, adding the firm is a "a prime candidate for our universe." He also said the platform gives pharmaceutical companies access to different patients than they could previously identify, a selling point for Celcuity. CELsignia has found responders to HER2-positive therapies and the company is developing other targets in breast cancer, Nowak said.

He added that the company is expected to announce new partnerships by the end of this year, which would serve as "more validation of the technology." In addition, any potential negative impact from the COVID-19 pandemic is already embedded in the company's stock price, Nowak said.

Celcuity has developed four tests for breast cancer sub-types, including the CELsignia HER2 Signaling Function test, a laboratory-developed test that diagnoses HER2-positive patients that could benefit from other breast cancer therapies. It also has tests evaluating the c-Met protein, P13K, and the RAS pathway.

The Minneapolis-based firm has an ongoing trial with the National Surgical Adjuvant Breast and Bowel Project to use its HSF test to select patients eligible for trastuzumab (Roche's Herceptin) and pertuzumab (Roche's Perjeta) that don't meet the standard criteria. Nowak said a positive result from the trial would validate "the business model of Celcuity [and] demonstrates deep cellular analysis as a viable tool in determining cancer therapy responders."

The HSF test is also being used in a trial assessing neratinib (Puma Biotechnology's Nerlynx) and chemotherapy for use in triple-negative breast cancer patients.

In early morning trading on Monday, Celcuity's share price was $6.00 on the Nasdaq.